Baseline
@baselinemarkets
🚨 First stress test for Baseline's V3 Market Maker 🚨 The results: 💰 $2.3M sell-off 📉 Price dropped just -15% 📉 Market cap $61M -> $51M How did our market maker handle it? And how does this liquidity compare to a basic XY=K AMM? Let's break it down 👇
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Baseline
@baselinemarkets
For beginners, Baseline Market Maker (BMM) is our latest liquidity design that uses Leveraged Anchor LP. This increases liquidity in the anchor position by borrowing reserves against supply it buys back within that range. Here is how the liquidity looks like: https://x.com/BaselineMarkets/status/1896956500536705533
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Baseline
@baselinemarkets
Here's a step-by-step of how BMM reacted to sell-off: 1. BMM starts off with 254 eth in liquidity depth. This means it takes that much to move price down by 2%. 2. Initial sell-off of 530 eth happens. 3. BMM absorbs $YES supply and updates liquidity depth to 370 eth. 4. Sell-off continues with 666 eth. 5. BMM absorbs supply again and updates liquidity depth to 486 eth. 6. Additional 265 eth sell-off happens but due to thick liquidity depth, price barely budges.
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Baseline
@baselinemarkets
In total, we saw $2.3M in sell-offs, price went down by -15% and market cap from $61M to $51M. The same sell-off in a xy=k pool (e.g. most tokens) would've moved price by -65% and reduced market cap from $61M down to $21M. Dumps suck, but w/o BMM, $YES would've been rekt.
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